Please
refer to the captioned Scheme circulated vide BPD Circular
No. 14 dated 18th May, 2004 alongwith other instructions
issued from time to time.
2.
In May 2004, State Bank of Pakistan introduced the captioned
Scheme to enable the exporters to upgrade their manufacturing
capacities and to improve the quality of products for
competing in the international market. The LTF-EOP Scheme
is being re-visited and revamped by eliminating a number
of procedural complexities. The existing scheme for Financing
Locally Manufactured Machinery (LMM) is also being merged
with it, to provide a level playing field to exporters
for setting up and balancing, replacement and modernization
(BMR) of Export Oriented Projects/Units including consideration
of SWAP of long term loans for imported machinery, equipment
& accessories (only for textile sector excluding spinning)
with proposed scheme. The new proposed scheme titled as
“Long
Term Financing Scheme for Imported & Locally Manufactured
Machinery” is under finalization and shall be issued
shortly which will replace the existing LTF-EOP and LMM
Schemes.
3. In the meantime the LTF-EOP Scheme issued by aforesaid
circular has been modified or amended as under with immediate
effect:-
i)
The banks/DFIs shall be entitled to earn a maximum spread
of 2.0% p.a. (instead of 3.0% p.a.) on financing provided
by them with immediate effect, thereby reducing the financial
cost of loan to borrower further by 1.0% p.a.
ii)
To meet the growing financing demand of the borrowers,
the procedure for limits allocation is being revised for
the Participating Financial Institutions (PFIs) under
the Scheme. Instead of present practice of allocating
LTF-EOP limit as sub-limit of EFS, the PFIs will be allocated
separate limits which will be aligned to their demand.
iii)
The utilization of at least 50% of the total limits by
PFIs for SME sector is being withdrawn. However, PFIs
are advised to give preference to meet the financing needs
of the SME borrowers.
iv)
Only SME borrowers, as defined in Prudential Regulations
for SMEs, are allowed to purchase plant, machinery, equipments
and accessories from the commercial importers.
v)
To meet the energy requirements of the export oriented
projects, the import of generators shall also be eligible
for financing under the scheme.
vi)
Where sponsor(s) of the project have already invested
share of equity in the project in the form of land, construction
of building and procurement of local machinery etc., the
same shall be treated as ‘equity’ of the sponsor
and the condition of maintaining an escrow account may
not be required provided overall prescribed debt/equity
ratio of 80:20 is met. The lending PFI should place a
certificate on record in this regard in the relevant credit
file for subsequent inspection by our BID.
vii)
The Banks/DFIs are allowed to sanction and disburse the
loan strictly in terms of criteria laid down in scheme
directly and no prior approval of SBP will be required.
viii)
The borrowers may import plant & machinery required
for their projects under the scheme irrespective of its
being locally manufactured.
4.
All other instructions on the subject shall remain unchanged.
Please
acknowledge receipt.